Barley – Procurement Best Practices & Sourcing Strategies

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Global Barley Market Size

ELINT Market Research predicts that the global barley market will see explosive growth in production in the 2023/24 fiscal year, with a total harvest of 156.5 million metric tons (MMT). This figure is above the current rate of global consumption of 152.8 MMT, so there is an excess of production capacity in the market. Among barley-producing regions, the European Union is the most significant contributor to global threshers in the 2022/2023 marketing year. The scale of this dominance highlights the EU’s central role in shaping the international barley landscape, contributing to influences on market trends and trading relationships. And because the EU is also the largest producer, it supplies an essential portion of the domestic market and plays a vital role in providing international markets. It becomes a central node in the global barley supply chain.

Balancing supply and demand: An influx of new players, such as the European Union, Russia, and Australia, are among the rapidly growing producers contributing significantly to the barley market. These trends show that the global trade of barley is gradually undergoing a new paradigm. Traditional players and rising stars all play essential roles in maintaining, expanding, or shrinking the market as a whole. Some significant trends are underway here that barley industry stakeholders must closely follow to make correct judgments and take full advantage of an evolving market.

Market Definition

Barley, scientific name Hordeum vulgare, is a cereal grain with a long history of cultivation since ancient times. The barley market dynamics cover producing, distributing, and consuming natural or manufactured things made from whole or malted grains. Their products range from malt to animal feed and varied food items, helping several industries.

Barley Market Drivers:

• Growing Demand for Malt Production: Rising demand for malt from the brewing and distilling industries provides a significant impetus to the market. Barley serves as a popular raw material for malt production, which is why there is tremendous demand for it worldwide. Barley has unique properties that make it suitable mainly for malt production.

• Health and Wellness Trends: As a whole grain with nutrients and fiber-based health aspects, barley fits the trend of consumers making their food choices based on personal health considerations. It stimulates demand for food products made from barley.

• Increasing Livestock Farming: Barley’s nutritional properties make it the principal component in animal feed. Given the trend for raising livestock, which is developing rapidly in nations with abundant labor and fewer environmental constraints, such as leading economies, e.g., China and Russia, demand for feed component barley is rising along with it.

Barley Market Challenges

• Competitive Substitutes: Alternative grains and substitutes compete with barley in different applications. Continuous shifts in consumer tastes or technology may affect the structure of this industry.

• Climate Vulnerability: The fact that barley cultivation is climate-sensitive renders the production schedule highly sensitive. Severe climate phenomena like droughts or torrential rainfall threaten stable and high-quality barley production.

• Global Supply Chain Disruptions: A downside of the worldwide supply chain is that it makes barley vulnerable to disturbances like transportation inconveniences, geopolitical tensions, and unanticipated events impairing the production or flow of barley.

Barley Market Opportunities

• Rising Demand for Organic Barley: As the consumer’s preference for organic and natural products becomes a trend, it provides an opportunity to cultivate and sell organic barley. This trend reflects the increasing tendency of consumers to be environmentally conscious.

• Expanding Craft Brewing Industry: With the craft brewing industry increasing, the prospects for barley are even better. High-quality ingredients, such as specialty malts, that are the focus of craft brewers, in turn, provide new channels for barley suppliers.

• Technological Advancements in Agriculture: With improvements in agricultural techniques such as precision farming and genetic enhancements, there are opportunities to increase both the yields and quality of barley, making sustainable harvests possible.

Barley Market Trends

• Diversification of Barley Products: Beyond the traditional uses, barley-based products are becoming more diverse in the market. As consumers’ tastes change, barley flour, snacks, and breakfast foods become popular.

• Traceability and Transparency: As consumers increasingly demand to trace the origin and production processes of their food products, a trend is taking shape in markets toward policies aimed at promoting transparency. In this way, companies taking traceability steps gain a marketing advantage.

• Sustainable Practices: Sustainability is an emerging trend in the market. Both stakeholders and producers are moving toward environmentally friendly farming practices, lowering water resource use, and energy-efficient processing methods.

Barley Market Segmentation

The barley market can be segmented based on:

• End-Use Industry: The research report classifies the market into Brewing and Distilling, Animal Feed, and Food and Beverages.

• Product Type: Based on product type, the research divides the market into Hulled Barley, Pearled Barley, and Barley Flour.

• Geography: The research report segments the market into Latin America, Europe, North America, Asia-Pacific, the Middle East, and Africa.

Barley Market Regional Dynamics

Malting capacity is distributed regionally globally, with the EU taking up 46%. With its strong agricultural tradition, expertise, and stringent quality standards, the EU is a crucial hub for malting activities. Economic growth in China and India has spurred craft breweries while changing consumer tastes gives Asia Pacific a 22% share. The North American market, with a 14% share, is a paradigm of innovation and sustainability for the booming craft brewing industry. South America’s 6.6% share represents a presence of small but growing stature, based upon the growth of craft brewing in countries like Argentina and Brazil. Given the favorable weather conditions and growing beer market, Russia’s 6.6% share also comes fortuitously. As an emerging manufacturer with considerable potential for further expansion in terms of malting capacity, it is establishing its strategic positioning.

Price Trends and Outlook

The market analysis of major hot spots in the European Union, prices are expected to reach 290 $/MT with an increase of 1.75%. Russia is coming in a close second, likely to sell at 270 $/MT, with prices increasing by 1.8%. A second major player is Canada, which also expects prices to go up 2.6%; this takes them up from the current 270 $/MT to 280 $ in the future. These trends give us a clear idea of the economic forces behind price variations from region to region.

Engagement Models

The barley market is within a contracted engagement model with terms under three years. Benchmark prices for the Chicago Board of Trade (CBOT) and Wheat MATIF Euronext lend stability and predictability to industry participants.

Leading Producers

Indeed, while the European Union ranks first in barley production, Russia and Australia also play essential roles. With its ideal weather conditions, Russia maintains a strong production performance. At the same time, Australia substantially contributes to the international market.

Emerging Supply Country Dynamics

While Canada is an up-and-comer in the barley production world, it projects that production will rise 3-4% from the previous year for its 2023/24 fiscal year. This growth also emphasizes Canada’s increasing importance on the world barley stage.

Barley Market Players

Within the changing geography of the world’s barley market, producers like Malteries Soufflet, with its specialized malting capability and international reputation for technology leadership in this field, play an essential role in increasing market size. Malteurop Groupe, one of the world’s leading maltsters and producers, is critical in ensuring quality and supply. With branches spread around the globe, Cofco Malt has become an essential power in the brewing and distilling world. Agromalte Agraria further sets itself apart by its focus on sustainable and responsible agriculture, providing significant contributions to the comprehensive development of the market. Collectively, these industry leaders represent the different skills and strategic moves driving the smooth running of a booming market.